Emini High 1 bull flag after strong May rally

Emini and Forex Trading Update:
Monday June 1, 2020

I will update again at the end of the day.

Pre-Open market analysis

Friday is a High 1 bull flag buy signal bar for today. It closed above 3044.25 and therefore the Emini is no longer in correction territory (10% down from the high).

Today might trigger the buy signal. But, there is not much left to this rally. There should be sellers around the March 3 high. The odds favor at least slightly higher prices before a reversal down.

But the sell zone is 3,000 to 3,150. The Emini is already in that zone. It is therefore reasonable for bears to begin to short with a stop at a new all-time high.

April was a strong High 1 buy signal bar on the monthly chart. May triggered the buy and was a strong entry bar. But February and March formed a Surprise Bear Breakout. Traders expect at least a small 2nd leg sideways to down this summer.

While June will probably go above the May high, the March 3 lower high is major resistance on the daily chart. Traders expect the rally to stall and then reverse in June.

Overnight Emini Globex trading

The Emini is down 6 points in the Globex range. It has stayed above Friday’s low and below Friday’s high. Today so far is an inside day.

Most days over the past month have had at least one swing up and one swing down. Day traders will expect trends to reverse after 2 – 3 hours again today.

Friday reversed up strongly late in the day. It then went sideways and had a final leg up. That trading range is reasonable candidate for a Final Bull Flag. Today might open back in that flag. If so, that would increase the chance of a trading range open.

Friday’s setups

Here are several reasonable stop entry setups from Friday. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.

If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.

EURUSD Forex market trading strategies

The EURUSD Forex market on the daily chart has rallied for 3 weeks. The rally has 3 legs and it therefore a wedge. A wedge rally to a double top typically begins to pull back.

Last week broke above a head and shoulders bottom. Traders expect a pullback to the neckline. This week will probably be the start of that pullback.

Less likely, there will be big bull trend bars on the daily chart today or tomorrow. If that were to happen, the rally would then continue up to the March high.

The bears want more than a pullback. They want a reversal down from a double top. Then, they want a break below the April 24 low. That is the neckline of the double top. A measured move down from there would be around par (1.0).

But without a strong reversal down this week, a pullback and a 2nd attempt to break above the March 27 high is more likely

Overnight EURUSD Forex trading

The 5 minute chart of the EURUSD Forex market traded above the March 27 high overnight. The bulls who bought that close had no chance to exit without a loss. Today is their chance.

The reversal down indicates that many bulls sold. Some of those bulls bought the near around the shoulders bottom and are taking profits.

With quiet overnight trading, a big trend up or down is not likely today. However, the open of the day is important. If the bears can get the day to close below the open, traders will see today as a sell signal bar at resistance on the daily chart. That will increase the chance of lower prices this week.

The bulls not only want today to close above the open, they want it to close above the March 27 high. That would increase the chance of higher prices this week.

Since the overnight range is small and there have been reversals, day traders have been scalping. Some bears are shorting for a swing down to below the May 21 high.

The day will probably continue as a quiet day. But because of the wedge rally to a double top, the bears will probably get a close below the open and then a pullback this week.

Summary of today’s S&P Emini futures price action and what to expect tomorrow

Here are several reasonable stop entry setups for today. I show each buy entry with a green rectangle and each sell entry with a red rectangle. I rarely also show limit order entries and entries on the close of bars. I do not want the lines to be distracting. If they are longer, I make them dotted. But, they have to be visible, so I make the shorter ones solid. Buyers of the Brooks Trading Course and Encyclopedia of Chart Patterns have access to a much more detailed explanation of the swing trades for each day (see Online Course/BTC Daily Setups).

My goal with these charts is to present an Always In perspective. If a trader was trying to be Always In or nearly Always In a position all day, and he was not currently in the market, these entries would be logical times for him to enter.

If the risk is too big for your account, you should wait for trades with less risk or trade an alternative market like the Micro Emini.

End of day summary

The Emini rallied in a Bull Trend From The Open today. It then went sideways in the middle of the day. The bulls want trend resumption up tomorrow and a breakout above the May high.

The cash index closed above its 10% pullback level today. It is therefore no longer in correction territory.

The Emini is in the sell zone on the daily chart. But traders expect the rally to get above the May high and possibly the March 3 high before reversing down for a month or two.

See the weekly update for a discussion of the price action on the weekly chart and for what to expect going into next week.

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Trading Room

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Charts use Pacific Standard Time

When I mention time, it is USA Pacific Standard Time (the Emini day session opens at 6:30 am PST, and closes at 1:15 pm PST). You can read background information on the intraday market reports on the Market Update page.

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